Banerjee, his wife and one-time Ph.D student Esther Duflo, and Harvard professor Michael Kremer were awarded the 2019 Nobel Prize in Economics for their work which has "dramatically improved our ability to fight poverty in practice," it was announced on Monday.
On being feted as the sixth Kolkatan to win the coveted prize, Banerjee, a South Pointer from Kolkata followed by Calcutta University, JNU and Harvard, asserted that he assumed that the others were much more distinguished than him.
Banerjee has bagged the coveted prize for his "experimental approach to alleviating global poverty".
Esther Duflo and Banerjee also co-founded MIT's Abdul Latif Jameel Poverty Action Lab (J-PAL) in 2003, along with a third co-founder, Sendhil Mullainathan, now of the University of Chicago.
J-PAL, a global network of anti-poverty researchers that conducts field experiments, has now become a major centre of research, facilitating work across the world.
Speaking here on the current slowdown in the Indian economy (attended by ), Banerjee said, "The condition of Indian economy is on a shaky ground. After witnessing the present (growth) data, we just can't be sure about it (revival of economy in near future)."
He added that the slowdown is acute, giving the example of the latest metric from India which is the average consumption in rural and urban areas that has gone down alarmingly and is a glaring sign which cannot be ignored by those in power. This shows that the economy is slowing rapidly.
On being questioned on what needs to be done to arrest this, Banerjee averred, "I don't know what can be done, but monetary policy stimulus alone won't help. There is a big fight on data integrity with the government pulling in one direction and data scientists pulling in another... This can't be good for anybody.
"Since the government has a large deficit and is trying to please all through stimulus measures, moving the needle on the fisc will not help at all since demand has reduced drastically. In the last five-six years, at least we could witness some growth, but now that assurance is also gone."
On how he felt after winning the prestigious Nobel Prize, Banerjee said that it was a combination of many things and while a lot of work has taken place in this regard since 1990, "perhaps the best emerged out of frustration with myself".
His work in poverty alleviation being seminal, he finds many changes over the last 20 years. According to him, "Things have changed and governments are showing more maturity and understanding. Earlier they wouldn't pay so much attention, thinking that may be I had escaped from a mental institution, but now they listen and are willing to use our processes.
"Trials have been taken, experiments conducted and successful plans are being rolled out. There is never an emergency and people tend to defer these decisions, but I find that our interventionist methods are beginning to take root now."
From here where? Again a very candid Banerjee said, "We hope that we get to do more of the same... Excited to be in this space, it obviously opens up many more opportunities with greater inventiveness and innovation, but beyond that it will be business as usual. For instance, in Haryana, we are working directly with government bodies and the level of imagination from their side is blowing us away."
On why the world is increasingly turning protectionist be it America First or Brexit or India following a policy of economic nationalism called 'Swadeshi' has the model of capitalism as we knew it failed?
Pat came his reply: "These decisions are a consequence of one not taking cognizance of the consequences of globalisation seriously. The processes required retraining, reskilling, opening borders and what have you. Instead, now we have barriers being raised and people becoming more insular, I wouldn't go to the extent of capitalism having failed, but yes it's warts are showing because people didn't understand its consequences."
Banerjee also noted that experiment-based work in development economics was a little-explored area of research 20 years ago, but has grown significantly since then.
Banerjee said, "The kind of work we've done over the years, when we started, was marginal in economics." In that light, he added, the Nobel award is "great for the development field" within economics, reflecting the significance of the work done by many of his colleagues.
In his defining book "Poor Economics", which won the Goldman Sachs Business Book of the Year award in 2011, Banerjee wrote: "Why would a man in Morocco who doesn't have enough to eat buy a television? Why is it so hard for children in poor areas to learn, even when they attend school? Does having lots of children actually make you poorer? Answering questions like these is critical if we want to have a chance to really make a dent against global poverty."
( With inputs from IANS )